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Turning the Healthcare Spend Right-side Up

It’s no secret that America spends a lot on healthcare. At 18% of GDP, a total of $3.2 trillion, America spends more on healthcare than any other country. However, recent data suggests the issue is less about how much we spend, and instead, where we spend it.

Despite the fact that the US spends almost three times the average of other high-income countries with similar economies like Japan, France, Australia, Switzerland, the US’s health outcomes look paltry. The US has fewer quality resources to meet the needs of its population, more deaths from preventable diseases, less access to health coverage, and lower life expectancy.    

So what are the other countries’ secret to spending less, and getting more for the price of healthcare? A different ratio of spending.

Spending Upside Down

When it comes to improving health outcomes, it matters less about how much a country spends, and more about where a country spends it. In the graph below, each country has one thing in common that America doesn’t; they allot more money to social services (think supportive housing, nutritional support, and health risk management and outreach) than they do to health expenditures (think hospitals, nursing care, clinical expenses and prescription drugs). For countries like Japan, France, Italy and Switzerland (all who have higher life expectancies than the US,) the ratio is 2-to-1 in favor of social services. The US’s ratio is the reverse, spending nearly twice as many dollars on health services than social ones.

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Prevention vs. Treatment

When we talk about spending money on social services versus health services, we are really talking about prevention versus treatment. Picture a patient who lives in poverty, has very minimal access to healthy food, has lived much of their life obese, and has been recently diagnosed with Type 2 diabetes. In the US, the focus of spending is to treat the diabetes with doctors and medications. In Sweden, which allocates more than 20% of their GDP to social services, the focus of spending is aggressive population health initiatives that encourage healthy lifestyles which help to prevent the development of chronic diseases. 

Prevention treats the issue before it spirals out of control. Treatment attempts to mitigate the lasting effects once it already has. And ultimately, as evidenced by countries like Sweden’s budgets, it is less expensive to encourage and support healthy populations than treat an already extremely sick one.

Upending the Spending Ratio 

While it may seem like a no-brainer to switch to a model like Sweden’s, upending a budget doesn’t happen overnight. But making an effort to establish tighter relationships between healthcare services and population health support is a start. Operations like Healthcare for the Homeless work to support one of the most at-risk populations in the US, the homeless, by providing primary health care, substance abuse treatment, referral to additional services and coordinate housing opportunities. Efforts like these not only improve the lives of recipients, but they also substantially improve the health of the at-risk populations they serve.

Preventative measures like these take a step in the right direction in alleviating American’s ailing health, as well as the crippling burden of ineffective healthcare on its budget.

Topics: Social Determinants of Health Healthcare Health Spending